EXHIBIT 4.8
EXECUTION VERSION
CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT
CONVERTIBLE PREFERRED STOCK AGREEMENT ("AGREEMENT") dated as of
June 26, 1998 between Able Telcom Holding Corp., a Florida corporation (the
"COMPANY"), and each person or entity listed as an investor on SCHEDULE I to
this Agreement (each individually an "INVESTOR" and collectively the
"INVESTORS").
W I T N E S S E T H:
WHEREAS, the Company desires to sell and issue to the Investors, and
the Investors wish to purchase from the Company, an aggregate of 4,000 shares of
Series B Convertible Preferred Stock (the "SERIES B PREFERRED STOCK"), at an
aggregate price of $20,000,000, having the rights and privileges set forth in
the Articles of Amendment setting forth the terms of the Series B Convertible
Preferred Stock of the Company ("ARTICLES OF AMENDMENT") in the form of EXHIBIT
1.1A attached hereto, on the terms and conditions set forth herein; and
WHEREAS, the Series B Preferred Stock will be convertible into shares
("COMMON SHARES") of common stock $0.001 par value per share, of the Company
("COMMON STOCK"), pursuant to the terms of the Articles of Amendment, and the
Investors will have registration rights with respect to such Common Shares and
the Warrant Shares (as defined herein) pursuant to the terms of that certain
Registration Rights Agreement to be entered into between the Company and the
Investors substantially in the form of EXHIBIT 4.2(F) hereto ("REGISTRATION
RIGHTS AGREEMENT"); and
WHEREAS, to induce the Investors to purchase the Series B Preferred
Stock, the Company has agreed to issue to the Investors warrants exercisable for
350,000 shares of Common Stock, in the form attached as EXHIBIT 1.1B (the
"WARRANTS");
NOW, THEREFORE, in consideration of the foregoing premises and the
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
PURCHASE AND SALE OF SERIES B PREFERRED STOCK AND WARRANTS
Section l.1 ISSUANCE OF SERIES B PREFERRED STOCK AND WARRANTS. Upon the
following terms and conditions, the Company shall issue and sell to each
Investor severally, and each Investor severally shall purchase from the Company,
shares of Series B Preferred Stock indicated next to such Investor's name on
SCHEDULE I attached hereto.
(a) ISSUANCE. Upon the following terms and conditions, the
Company shall issue and sell to each Investor, and each Investor severally shall
purchase from the Company, the number of shares of Series B Preferred Stock and
the number of Warrants indicated next to such Investor's name on SCHEDULE I
attached hereto.
(b) PURCHASE PRICE. The purchase price per share for the
Series B Preferred Stock to be acquired by each Investor (the "PURCHASE PRICE")
shall be $5,000.
(c) THE CLOSING.
(i) The closing of the purchase and sale of the
Series B Preferred Stock and the Warrants (the "CLOSING"),
shall take place at the offices of Xxxxxx & Xxxxxx, 000 00xx
Xxxxxx X.X., Xxxxxxxxxx, X.X. ("INVESTORS' COUNSEL"), at 10:00
a.m., local time on the later of the following: (x) the date
on which the last of the conditions set forth in Article IV
hereof to be fulfilled and applicable to the Closing shall be
fulfilled or waived in accordance herewith, or (y) such other
time and place and/or on such other date as the Investors and
the Company may agree. The date on which the Closing occurs is
referred to herein as the "CLOSING DATE".
(ii) On the Closing Date, the Company shall deliver
to each Investor (x) a certificate or certificates (with the
number of such certificates requested by such Investor)
representing the shares of Series B Preferred Stock purchased
hereunder by such Investor at the Closing registered in the
name of the Investor or its nominee and (y) the Warrants
registered in the name of such Investor or its nominee in such
denominations as reasonably requested by such Investor, and
such Investor shall deliver to the Company the Purchase Price
for the shares of Series B Preferred Stock purchased by such
Investor hereunder by wire transfer in immediately available
funds to an account designated in writing by the Company. The
delivery of payment by such Investor of the Purchase Price
applicable to it as set forth in this paragraph shall
constitute a payment delivered to the Company in satisfaction
of such Investor's obligation to pay the Purchase Price
hereunder. In addition, each of the Company and each Investor
shall deliver all documents, instruments and writings required
to be delivered by such party pursuant to this Agreement at or
prior to the applicable Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby makes the following representations and warranties to each of the
Investors as of the date hereof and on each Closing Date:
(a) ORGANIZATION AND QUALIFICATION; MATERIAL ADVERSE EFFECT.
The Company is a corporation duly incorporated and existing in good standing
under the laws of the State of Florida and has the requisite corporate power to
own its properties and to carry on its business as now being conducted. The
Company does not have any direct or indirect subsidiaries other than the
subsidiaries listed on EXHIBIT 2.1(A) attached hereto. Except where specifically
indicated to the contrary, all references in this Agreement to subsidiaries
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shall be deemed to refer to all direct and indirect subsidiaries of the Company.
The Company and each subsidiary is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary other than those in which the failure so to qualify would not have a
Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means (i) any adverse effect
on the business, operations, properties, prospects, or financial condition of
the entity with respect to which such term is used and its subsidiaries or other
entities controlled by such entity, taken as a whole and which is (either alone
or together with all other adverse effects) material to such entity and its
subsidiaries or other entities controlled by such entity taken as a whole, and
(ii) any condition or situation, whether or not a materially adverse effect,
which would prohibit or otherwise adversely interfere with or affect the ability
of any party to this Agreement to enter into or perform its obligations under,
or to consummate the transactions contemplated by, this Agreement, the
Registration Rights Agreement, the Articles of Amendment or the Warrants or any
other agreement or document contemplated hereby or thereby.
(b) AUTHORIZATION; ENFORCEMENT. (i) The Company has all
requisite corporate power and authority to enter into and perform this
Agreement, the Warrants and the Registration Rights Agreement and to consummate
the transaction contemplated thereby and to issue the Series B Preferred Stock
and Warrants in accordance with the terms hereof and thereof, and has duly filed
with the Secretary of State of the State of Florida the Articles of Amendment,
(ii) the execution and delivery of this Agreement, the Warrants and the
Registration Rights Agreement by the Company and the consummation by it of the
transactions contemplated hereby and thereby, including the issuance of the
Series B Preferred Stock, the Warrants, the Common Shares and the Warrant Shares
have been duly authorized by all necessary corporate action, and no further
consent or authorization of the Company or its Board of Directors (or any
committee or subcommittee thereof) or stockholders is required, (iii) this
Agreement has been, and on the Closing Date, the Warrants, the Articles of
Amendment and the Registration Rights Agreement will be, duly executed and
delivered by the Company, and (iv) this Agreement constitutes, and upon
execution, issuance and delivery thereof the Warrants, the Articles of Amendment
and the Registration Rights Agreement shall constitute, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws
relating to, or affecting generally the enforcement of creditors' rights and
remedies or by other equitable principles of general application.
(c) CAPITALIZATION. The authorized capital stock of the
Company consists of 25,000,000 shares of Common Stock and 1,000,000 shares of
convertible redeemable preferred stock, par value $0.10 per share (the
"Preferred Stock"); there are 9,973,863 shares of Common Stock and no shares of
Preferred Stock issued and outstanding; and 3,295,147 shares of Common Stock and
no shares of Preferred Stock are reserved for issuance to persons other than the
Investors. All of the outstanding shares of the Company's Common Stock and
Preferred Stock have been validly authorized and issued and are fully paid and
nonassessable. No shares of capital stock are entitled to preemptive rights; and
there are as of the date hereof outstanding options for 2,844,071 shares of
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Common Stock and outstanding warrants for 501,708 shares of Common Stock
(excluding the Warrants). Any shares of Preferred Stock issued or to be issued
will be junior in all respects to the Series B Preferred Stock. There are no
other scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights exchangeable for or convertible
into, any shares of capital stock of the Company, or contracts, commitments,
understandings, or arrangements by which the Company is or may become bound to
issue additional shares of capital stock of the Company or options, warrants,
scrip, rights to subscribe to, or commitments to purchase or acquire, any
shares, or securities or rights convertible or exchangeable into shares, of
capital stock of the Company. Attached hereto as EXHIBIT 2.1(C)(I) is a true and
correct copy of the Company's Certificate of Incorporation (the "CHARTER"), as
in effect on the date hereof, and attached hereto as EXHIBIT 2.1(C)(II) is a
true and correct copy of the Company's By-Laws (the "BY-LAWS"), as in effect on
the date hereof.
(d) ISSUANCE OF COMMON SHARES. The Common Shares and the
shares of Common Stock issuable upon the exercise of the Warrants (the "WARRANT
SHARES") are duly authorized and reserved for issuance and, upon such conversion
in accordance with the Articles of Amendment and/or exercise in accordance with
the Warrants, such Common Shares and Warrant Shares will be validly issued,
fully paid and non-assessable, free and clear of any and all taxes, liens,
claims and encumbrances, and entitled to be traded on the Nasdaq National Market
System ("NASDAQ NMS") or the American Stock Exchange or the New York Stock
Exchange (collectively with the Nasdaq NMS, the "APPROVED MARKETS"), and the
holders of such Common Shares and Warrant Shares shall be entitled to all rights
and preferences accorded to a holder of Common Stock. The outstanding shares of
Common Stock are currently listed on the Nasdaq NMS.
(e) NO CONFLICTS. The execution, delivery and performance by
the Company of this Agreement, the Registration Rights Agreement, the Warrants
and the Articles of Amendment, including the issuance of the Series B Preferred
Stock and the Warrants, the conversion of the Series B Preferred Stock into the
Common Shares and the exercise of the Warrants into the Warrant Shares, the
reservation of the Common Shares and Warrant Shares and the consummation by the
Company of the transactions contemplated hereby and thereby do not and will not
(i) result in a violation of the Company's Charter or By-Laws or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture, patent, patent
license or instrument to which the Company or any of its subsidiaries is a
party, or (iii) result in a violation of any federal, state, local or foreign
law, rule, regulation, order, judgment or decree (including Federal and state
securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries is bound or affected. The business of the Company and its direct
and indirect subsidiaries is not being conducted in violation of, and is in
compliance with, all applicable laws, ordinances and regulations of any
governmental entity or the Company's Charter or By-Laws. Except for filings or
registrations pursuant to applicable Federal, state or foreign securities laws
that are expressly contemplated by the transactions contemplated
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herein and in the Registration Rights Agreement, the Company is not required
under Federal, state, local or foreign law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it (x) to execute, deliver or perform
any of its obligations under this Agreement, the Registration Rights Agreement,
the Articles of Amendment or the Warrants, (y) to issue and sell the Series B
Preferred Stock and the Warrants in accordance with the terms hereof, to issue
the Common Shares upon conversion of the Series B Preferred Stock or to issue
the Warrant Shares on exercise of the Warrants or (z) for the registration
provisions provided in the Registration Rights Agreement.
(f) SEC DOCUMENTS; NO NON-PUBLIC INFORMATION; FINANCIAL
STATEMENTS. The Common Stock of the Company is registered pursuant to Section
12(g) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")
and the Company is in full compliance with and has filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Securities and Exchange Commission ("SEC") pursuant to the reporting
requirements of the Exchange Act, including material filed pursuant to Section
13(a) or l5(d), in addition to one or more registration statements and
amendments thereto heretofore filed by the Company with the SEC (all of the
foregoing including all filings, exhibits, financial statements, schedules and
documents incorporated by reference therein being referred to herein as the "SEC
DOCUMENTS"). The Company has not directly or indirectly provided to the
Investors any material non-public information or any information which,
according to applicable law, rule or regulation, should have been disclosed
publicly by the Company but which has not been so disclosed. As of their
respective dates, the SEC Documents complied (and as of its effective date, the
Registration Statement (as defined in the Registration Rights Agreement) will
comply) in all material respects with the requirements of the Exchange Act (or,
in the case of such Registration Statement, the Securities Act of 1933, as
amended (the "ACT")) and the rules and regulations of the SEC promulgated
thereunder and other federal, state and local laws, rules and regulations
applicable to such SEC Documents (or such Registration Statement), and none of
the SEC Documents contained (and, as of its effective date, such Registration
Statement will not contain) any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The SEC Documents contain (and, as of its effective date,
such Registration Statement will contain) all material information concerning
the Company, and no event or circumstance has occurred which would require the
Company to disclose such event or circumstance in order to make the statements
in the SEC Documents not misleading on the date hereof or on the Closing Date
but which has not been so disclosed (assuming for this purpose that the
Company's reports filed under the Exchange Act are being incorporated into an
effective Registration Statement filed by the Company under the Securities Act).
The financial statements of the Company included (or to be included) in the SEC
Documents (or the Registration Statement) comply (or will comply) as to form and
substance in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC or other applicable rules and
regulations with respect thereto. Such financia1 statements have been (or will
be) prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved
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(except (i) as may be otherwise indicated in such financial statements or the
notes thereto or (ii) in the case of unaudited interim statements, to the extent
they may not include footnotes or may be condensed or summary statements) and
fairly present (or will fairly present) in all material respects the financial
position of the Company as of the dates thereof and the results of operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(g) PRINCIPAL EXCHANGE/MARKET. The principal market on which
the Common Stock is currently traded is the Nasdaq NMS.
(h) NO MATERIAL ADVERSE CHANGE. Since October 31, l997, no
Material Adverse Effect has occurred or exists with respect to the Company or
any of its subsidiaries, and no event or circumstance has occurred that with
notice or the passage of time or both is reasonably likely to result in a
Material Adverse Effect with respect to the Company or any of its subsidiaries.
(i) NO UNDISCLOSED LIABILITIES. The Company and its
subsidiaries have no liabilities or obligations not disclosed in the SEC
Documents, other than those liabilities incurred in the ordinary course of the
Company's or its subsidiaries' respective businesses since October 31, 1997,
which liabilities, individually or in the aggregate, do not or would not have a
Material Adverse Effect on the Company or any of its direct or indirect
subsidiaries.
(j) NO UNDISCLOSED EVENTS OR CIRCUMSTANCES. No event or
circumstance has occurred or exists with respect to the Company or its direct or
indirect subsidiaries or their respective businesses, properties, prospects,
operations or financial condition, which, under applicable law, rule or
regulation, requires public disclosure or announcement by the Company but which
has not been so publicly announced or disclosed.
(k) NO GENERAL SOLICITATION. Neither the Company, nor any of
its affiliates, or, to its knowledge, any person acting on its or their behalf,
has engaged in or conducted any form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) with respect to
or in connection with the offer or sale of the Series B Preferred Stock, the
Warrants, the Common Shares or the Warrant Shares.
(l) NO INTEGRATED OFFERING. Neither the Company, nor any of
its affiliates, nor, to its knowledge, any person acting on its or their behalf,
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under circumstances that would require
registration of the Series B Preferred Stock, the Warrants, the Common Shares or
Warrant Shares under the Act.
The issuance of the Series B Preferred Stock, Warrants, Common
Shares or Warrant Shares to the Investors will not be integrated with any other
issuance of the Company's securities (past, current or future) which requires
stockholder approval under the rules of the Nasdaq NMS.
(m) [INTENTIONALLY OMITTED]
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(n) INTELLECTUAL PROPERTY. The Company (and/or its
wholly-owned subsidiaries) owns or has licenses to use certain patents,
copyrights and trademarks ("INTELLECTUAL PROPERTY") associated with its
business. The Company and its subsidiaries have all intellectual property rights
which are needed to conduct the business of the Company and its subsidiaries as
it is now being conducted or as proposed to be conducted as disclosed in the SEC
Documents. Neither the Company nor any of its subsidiaries has any reason to
believe that the intellectual property rights which it owns are invalid or
unenforceable or that the use of such intellectual property by the Company or
its subsidiaries infringes upon or conflicts with any right of any third party,
and neither the Company nor any of its subsidiaries has received notice of any
such infringement or conflict. Neither the Company nor any of its subsidiaries
has knowledge of any infringement of its intellectual property by any third
party.
(o) NO LITIGATION. Except as set forth in the SEC Documents,
no litigation, arbitration, proceeding or claim (including those for unpaid
taxes) against the Company or any of its subsidiaries is pending or, to the
Company's knowledge, threatened, and no other event has occurred, which if
determined adversely could singly or in the aggregate reasonably be expected to
have a Material Adverse Effect on the Company or could reasonably be expected
singly or in the aggregate to materially and adversely effect the transactions
contemplated hereby. The legal proceedings described in the SEC Documents will
not have such an effect on the transactions contemplated hereby, and will not
have a Material Adverse Effect.
(p) BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by any Investor relating to this Agreement or the transactions
contemplated hereby.
(q) ACKNOWLEDGEMENT OF DILUTION. The Company understands and
acknowledges that the number of shares of Common Stock constituting Common
Shares or Warrant Shares may increase substantially in certain circumstances,
including the circumstance where the trading price of the Common Stock declines
which may have a dilutive effect on the Common Stock. Subject to Section 3.14,
the Company acknowledges that its obligation to issue Common Shares upon
conversion of the Series B Preferred Stock and Warrant Shares upon exercise of
the Warrants is absolute and unconditional, regardless of the dilution that such
issuance may have on other shareholders of the Company.
(r) OTHER INVESTORS. Except as set forth on EXHIBIT 2.1(R),
there are no outstanding securities issued by the Company that are entitled to
registration rights under the Act. Except as set forth in EXHIBIT 2.1(R), there
are no outstanding securities issued by the Company that are directly or
indirectly convertible into, exercisable into, or exchangeable for, shares of
Common Stock of the Company that have anti-dilution, preemptive or similar
rights that would be affected or triggered by the issuance of the Series B
Preferred Stock, the Common Shares, the Warrant Shares or the Warrants.
(s) CERTAIN TRANSACTIONS. Except as disclosed in the SEC
Documents, none of the officers, directors, or employees of the Company is
presently a party to any transaction with the Company or any of its subsidiaries
(other than for services as
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employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for
rental of real or personal property to or from, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the
Company, any corporation, partnership, trust or other entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee or partner.
(t) PERMITS; COMPLIANCE. Each of the Company and each of its
subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exemptions, consents, certificates,
approvals and orders necessary to own, lease and operate its properties and to
carry on its business as it is now being conducted (collectively, the "COMPANY
PERMITS"). There is no action or proceeding pending or, to the knowledge of the
Company, threatened regarding suspension or cancellation of any of the Company
Permits, except with respect to such Company Permits the failure of which to
possess, or the cancellation or suspension of which, would not, individually or
in the aggregate, have a Material Adverse Effect on the Company. Neither the
Company nor any of its subsidiaries is in material conflict with, or in material
default or material violation of, any of the Company Permits. Since October 31,
1997, neither the Company nor any of its subsidiaries has received any
notification with respect to possible material conflicts, material defaults or
material violations of applicable laws.
(u) INSURANCE. The Company and each of its subsidiaries are
insured by insurers of recognized financial responsibility against such losses
and risks and in such amounts as management of the Company believes to be
prudent and customary in the businesses in which the Company and its direct and
indirect subsidiaries are engaged. Neither the Company nor any such subsidiary
has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost.
(v) INTERNAL ACCOUNTING CONTROLS. Each of the Company and each
of its subsidiaries maintains a system of internal accounting controls
sufficient, in the judgment of the Company's board of directors, to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(w) SHAREHOLDER RIGHTS PLAN. None of the acquisition of the
Preferred Shares, Warrants, Common Shares or Warrant Shares, nor the deemed
beneficial ownership of shares of Common Stock prior to, or the acquisition of
such shares pursuant to, the conversion of the Preferred Shares or the exercise
of the Warrants will, in any event or under any circumstance, trigger the poison
pill provisions of any stockholders' rights
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agreement or any similar agreements currently in effect or to be adopted, or a
substantially similar occurrence under any agreement or plan.
(x) ENVIRONMENTAL MATTERS. Except as otherwise disclosed in
the SEC Documents, each of the Company and each of its subsidiaries is in
compliance in all material respects with all applicable state and federal
environmental laws, and no event or condition has occurred that may interfere
with the compliance by the Company or any of its subsidiaries with any
environmental law or that may give rise to any liability under any environmental
law that, individually or in the aggregate, would have a Material Adverse
Effect.
(y) SOLVENCY.
(i) The Company's fair saleable value of its assets
exceeds the amount that will be required to be paid on or in
respect of the Company's existing debts and other liabilities
(including contingent liabilities) as they mature.
(ii) The Company's assets do not constitute
unreasonably small capital to carry out its business as now
conducted and as proposed to be conducted including the
Company's capital needs taking into account the particular
capital requirements of the business conducted by the Company,
and projected capital requirements and capital availability
thereof.
(iii) The Company does not intend to incur debts
beyond its ability to pay such debts as they mature (taking
into account the timing and amounts of cash to be payable on
or in respect of its debt). The cash flow together with the
proceeds received from the liquidation of the Company's assets
after taking into account all anticipated uses of the cash
will at all times be sufficient to pay all amounts on or in
respect of its debt when such amounts are required to be paid.
(iv) The Company does not intend, and does not
believe, that final judgments against the Company in actions
for money damages will be rendered at a time when, or in an
amount such that, the Company will be unable to satisfy any
such judgments promptly in accordance with their terms The
Company's cash flow, after taking into account all other
anticipated uses of the cash (including the payments on or in
respect of debt referred to in paragraph (iii) above), will at
all times be sufficient to pay all such judgments promptly in
accordance with their terms.
(v) Neither the Company nor any of its subsidiaries
is subject to any bankruptcy, insolvency or similar
proceeding.
(z) TAXES. All federal, state, city and other tax returns,
reports and declarations required to be filed by or on behalf of the Company or
any of its subsidiaries have been filed and such returns are complete and
accurate and disclose all taxes (whether
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based upon income, operations, purchases, sales, payroll, licenses,
compensation, business, capital, properties or assets or otherwise) required to
be paid in the periods covered thereby. Copies of all such returns have been
provided to the Investors. All taxes shown on such returns and any deficiency
assessments, penalties and interest have been paid. All taxes required to be
withheld by or on behalf of the Company in connection with amounts paid or owing
to any employees, independent contractor, creditor or other party have been
withheld, and such withheld taxes have either been duly and timely paid to the
proper governmental authorities or set aside and reserved in accounts for such
purposes (including, but not limited to any tax required by Chapter 201 of Title
XIV of the Florida Code).
(aa) TITLE TO PROPERTIES; ENCUMBRANCES. There are no real
property, leaseholds, or other interests therein owned by the Company not
reflected in the Company's financial statements included in the Company's Annual
Report on Form 10-K for the year ended October 31, 1997. The Company owns (with
good and marketable title in the case of real property) all the properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
that it purports to own. All material properties and assets are free and clear
of all encumbrances and are not, in the case of real property, subject to any
rights of way, building use restrictions, exceptions, variances, reservations or
limitations of any nature, except with respect to all such properties and
assets, (a) mortgages or security interests securing specified liabilities or
obligations, with respect to which no default (or event that, with notice or
lapse of time or both, would constitute a default) exists, (b) liens for current
taxes not yet due, and (c) with respect to real property, (i) minor
imperfections of title, if any, none of which is substantial in amount,
materially detracts from the value, or impairs the use, of the property subject
thereto, or impairs the operations the Company or any of its subsidiaries, and
(ii) zoning laws and other land use restrictions that do not impair the present
or anticipated use of the property subject thereto. All buildings, plans, and
structures owned by the Company or any of its subsidiaries lie wholly within the
boundaries of the real property owned by the Company or such subsidiaries, and
do not encroach upon the property of, or otherwise conflict with the property
rights of, any other person.
(bb) NO VIOLATION OF CREDITOR COVENANTS. No event of default
has occurred and is continuing (or event which with lapse of time or notice of
both would constitute such an event) under any of the revolving credit
facilities or other financing arrangements of the Company or any of its
subsidiaries.
(cc) EFFECTIVENESS OF SEC FILINGS. The SEC has not issued any
stop order or other order suspending the effectiveness of any registration
involving the Company or any of its subsidiaries.
(dd) ACKNOWLEDGMENT REGARDING INVESTORS' PURCHASE OF
SECURITIES. The Company acknowledges and agrees that the Investors are acting
solely in the capacity of arm's length purchasers with respect to this Agreement
and the transactions contemplated hereby. The Company further acknowledges that
no Investor is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions
contemplated hereby and any statement made by any Investor or any of their
respective representatives or agents in connection with this Agreement and the
transactions contemplated hereby is not advice or a recommendation and is merely
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incidental to the Investors' purchase of the Securities. The Company further
represents to each Investor that the Company's decision to enter into this
Agreement has been based solely on the independent evaluation of the Company and
its representatives.
(ee) FOREIGN CORRUPT PRACTICES. Neither the Company, nor any
of its subsidiaries, nor any director, officer, agent, employee or other person
acting on behalf of the Company or any Subsidiary has, in the course of his
actions for, or on behalf of, the Company, used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expenses relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the U.S. Foreign Corrupt
Practices Act of 1977; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee.
Section 2.2 REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each of
the Investors, severally (as to itself) and not jointly, hereby makes the
following representations and warranties to the Company as of the date hereof
and on the Closing Date:
(a) AUTHORIZATION; ENFORCEMENT. (i) Such Investor has the
requisite power and authority to enter into and perform this Agreement and the
Registration Rights Agreement and to purchase the Series B Preferred Stock being
sold hereunder and to acquire the Warrants, (ii) the execution and delivery of
this Agreement and the Registration Rights Agreement by such Investor and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate or partnership action, and (iii) this
Agreement constitutes, and upon execution, issuance and delivery thereof the
Registration Rights Agreement will constitute, valid and binding obligations of
such Investor enforceable against such Investor in accordance with their terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of creditors' rights and remedies or by
other equitable principles of general application.
(b) NO CONFLICTS. The execution, delivery and performance by
such Investor of this Agreement and the Registration Rights Agreement, the
performance by such Investor under the terms of the Articles of Amendment and
Warrants, and the consummation by such Investor of the transactions contemplated
hereby and thereby do note and will not result in a violation of such Investor's
organizational documents.
(c) INVESTMENT REPRESENTATION. Such Investor is purchasing the
Series B Preferred Stock and the Warrants for its own account and not with a
view to distribution thereof in violation of any securities laws. Such Investor
has no present intention to sell the Series B Preferred Stock, Warrants, Common
Shares or Warrant Shares in violation of Federal or state securities laws and
such Investor has no present arrangement (whether or not legally binding) to
sell the Series B Preferred Stock, Warrants, Common Shares or Warrant Shares to
or through any person or entity; PROVIDED, however, that by making the
representations herein, such Investor does not agree to hold the Series B
Preferred Stock, Warrants, Common Shares or Warrant Shares for any minimum or
other specific term and
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reserves the right to dispose of the Series B Preferred Stock, Warrants, Common
Shares or Warrant Shares at any time in accordance with Federal and state
securities laws applicable to such disposition.
(d) ACCREDITED INVESTOR. Such Investor is an "accredited
investor" as defined in Rule 501 of Regulation D promulgated under the Act. Such
Investor has such knowledge and experience in financial and business matters in
general and investments in particular that it is able to evaluate the merits and
risks of an investment in the Series B Preferred Stock and the Warrants and to
protect its own interests in connection with such investment. In addition (but
without limiting the effect of the Company's representations and warranties
contained herein), such Investor has received such information as it considers
necessary or appropriate for deciding whether to purchase the Series B Preferred
Stock and the Warrants pursuant hereto.
(e) RULE 144. Such Investor understands that there is no
public trading market for the Series B Preferred Stock or the Warrants, that
none is expected to develop, and that the Series B Preferred Stock and the
Warrants must be held indefinitely unless such Series B Preferred Stock or
Warrants are converted or exercised, as the case may be, and the Common Shares
or Warrant Shares, as the case may be, are registered under the Act or an
exemption from registration is available. Such Investor has been advised or is
aware of the provisions of Rule 144 promulgated under the Act.
(f) BROKERS. Such Investor has taken no action which would
give rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by the Company relating to this Agreement or the transactions
contemplated hereby.
(g) NOT AN AFFILIATE. Such Investor is not an officer,
director or "affiliate" (as that term in defined in Rule 405 of the Act) of the
Company.
(h) RELIANCE BY THE COMPANY. Such Investor understands that
the Series B Preferred Stock and Warrants are being offered and sold in reliance
on a transactional exemption from the registration requirements of Federal and
state securities laws and that the Company is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of such Investor set forth herein in order to determine the
applicability of such exemptions and the suitability of such Investor to acquire
the Series B Preferred Stock and Warrants.
ARTICLE III
COVENANTS
Section 3.1 REGISTRATION AND LISTING; EFFECTIVE REGISTRATION. Until
such time as no Series B Preferred Stock or Warrants are outstanding, the
Company will cause the Common Stock to continue at all times to be registered
under Section 12(g) of the Exchange Act, will comply in all respects with its
reporting and filing obligations under the Exchange Act, and will not take any
action or file any document (whether or not permitted
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by the Exchange Act or the rules thereunder) to terminate or suspend such
reporting and filing obligations. Until such time as no Series B Preferred Stock
or Warrants are outstanding, the Company shall continue the listing or trading
of the Common Stock on the Nasdaq NMS or one of the other Approved Markets and
shall comply in all respects with the Company's reporting, filing and other
obligations under the bylaws or rules of the Nasdaq NMS or such other Approved
Market on which the Common Stock is listed and the National Association of
Securities Dealers ("NASD"). The Company shall cause the Common Shares and the
Warrant Shares to be listed on the Nasdaq NMS (or, if the Common Stock is listed
on another of the Approved Markets, on such other Approved Market) no later than
the registration of the Common Shares or the Warrant Shares under the Act, and
at all times shall continue such listing(s) on one of the Approved Markets on
which the Common Stock is listed. As used herein and in the Registration Rights
Agreement, the Articles of Amendment and the Warrants, the term "EFFECTIVE
REGISTRATION" shall mean that (a) all registration obligations of the Company
pursuant to the Registration Rights Agreement have been satisfied, (b) such
registration is not subject to any suspension or stop order, (c) the prospectus
for each of the Common Shares issuable upon conversion of the Series B Preferred
Stock and the Warrant Shares issuable upon exercise of the Warrants is current,
(d) such Common Shares and Warrant Shares are listed for trading on one of the
Approved Markets and such trading has not been suspended for any reason, (e)
none of the Company or any direct or indirect subsidiary of the Company is
subject to any bankruptcy, insolvency or similar proceeding, and (f) no
Interfering Event (as defined in Section 2(b) of the Registration Rights
Agreement) exists.
Section 3.2 SERIES B PREFERRED STOCK ON CONVERSION AND WARRANTS ON
EXERCISE.
(a) Upon any conversion by an Investor (or then holder of
Series B Preferred Stock) of the Series B Preferred Stock pursuant to the terms
thereof, the Company shall issue and deliver to such Investor (or holder) within
three (3) Trading Days (as defined in the Articles of Amendment) of the
Conversion Date (as defined in the Articles of Amendment) a new certificate or
certificates for the number of shares of Series B Preferred Stock which such
Investor (or holder) has not yet elected to convert but which are evidenced in
part by the certificate(s) submitted to the Company in connection with such
conversion (with the number of and denomination of such new certificate(s)
designated by such Investor or holder).
(b) Upon any partial exercise by an Investor (or then holder
of the Warrants) of the Warrants, the Company shall issue and deliver to such
Investor (or holder) within three (3) days of the date on which such Warrants
are exercised, a new Warrant or Warrants representing the number of adjusted
Warrant Shares, in accordance with the terms of Section 2 of the Warrants.
Section 3.3 REPLACEMENT CERTIFICATES AND WARRANTS.
(a) The certificate(s) representing the shares of Series B
Preferred Stock held by any Investor (or then holder) may be exchanged by such
Investor (or such holder) at any time and from time to time for certificates
with different denominations representing an equal aggregate number of shares of
Series B Preferred Stock, as requested by such Investor
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(or such holder) upon surrendering the same. No service charge will be made for
such registration or transfer or exchange.
(b) The Warrants will be exchangeable at the option of any
Investor (or then holder of the Warrants) at the office of the Company for other
Warrants of different denominations entitling such Investor (or the holder
thereof) to purchase in the aggregate the same number of Warrant Shares as are
purchasable under such Warrants. No service charge will be made for such
transfer or exchange.
Section 3.4 EXPENSES. The Company shall pay in immediately available
funds, at the Closing and promptly upon receipt of any further invoices relating
to same, all reasonable due diligence fees and expenses and attorneys' fees and
expenses of the Investors' Counsel incurred by the Investors in connection with
the preparation negotiation execution and delivery of this Agreement, the
Registration Rights Agreement, the Articles of Amendment, the Warrants and the
related agreements and documents and the transactions contemplated hereunder and
thereunder; PROVIDED, however, that the Company shall have no obligation under
this Section 3.4 to make any payments in excess of $30,000. At Closing, the
Company shall pay the amount due for such fees and expenses (which may include
fees and expenses estimated to be incurred for completion of the transaction
including post-closing matters). In the event such amount is ultimately less
than the actual fees and expenses, the Company shall promptly pay such
deficiency upon receipt of an invoice regarding same.
Section 3.5 SECURITIES COMPLIANCE. The Company shall notify the SEC and
the Nasdaq NMS, in accordance with their requirements, of the transactions
contemplated by this Agreement, the Articles of Amendment, the Registration
Rights Agreement and the Warrants, and shall take all other necessary action and
proceedings as may be required and permitted by applicable law, rule and
regulation for the legal and valid issuance of the Series B Preferred Stock
hereunder, the Common Shares issuable upon conversion thereof, the Warrants and
the Warrant Shares issuable upon exercise of the Warrants.
Section 3.6 DIVIDENDS OR DISTRIBUTIONS. So long as any shares of Series
B Preferred Stock or Warrants remain outstanding, the Company agrees that it
shall not (a) declare or pay any dividends or make any distributions to any
holder or holders of Common Stock or (b) purchase or otherwise acquire for
value, directly or indirectly, any Common Stock or other equity security of the
Company.
Section 3.7 NOTICES. The Company agrees to provide all holders of
Series B Preferred Stock and Warrants with copies of all notices and
information, including without limitation notices and proxy statements in
connection with any meetings, that are provided to the holders of shares of
Common Stock contemporaneously with the delivery of such notices or information
to such Common Stock holders and within one (1) day after release, copies of all
press releases issued by the Company or any of its subsidiaries.
Section 3.8 USE OF PROCEEDS. The Company agrees that the proceeds
received by the Company from the sale of the Series B Preferred Stock hereunder
shall be used for
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working capital purposes or in connection with the acquisition of MFS Network
Technologies, Inc.
Section 3.9 ADJUSTMENTS. If at any time within twelve (12) months from
the Closing Date the Company sells or issues Common Stock (or other equity
securities or rights exercisable or exchangeable for, or convertible into,
Common Stock or such other equity securities including debt with an equity
component) at a discount greater (or in the Investor's judgment more favorable
to the purchaser thereof) than the discount specified in Section 3(b)(i) of the
Articles of Amendment or at a ceiling price less than the Conversion Price (as
defined in the Articles of Amendment and as adjusted pursuant to the terms
thereof), then the Series B Preferred Stock will automatically (at the
Investor's request) be adjusted to provide for such greater discount or lower or
more favorable Conversion Price, as applicable.
Section 3.10 RESERVATION OF STOCK ISSUABLE UPON CONVERSION OF SERIES B
PREFERRED STOCK AND UPON EXERCISE OF THE WARRANTS. The Company shall at all
times reserve and keep available out of its authorized but unissued shares of
Common Stock solely for the purpose of effecting the conversion of the Series B
Preferred Stock and the exercise of the Warrants, free of preemptive rights,
such number of its shares of Common Stock as shall from time to time be
sufficient to effect the conversion of all outstanding Series B Preferred Stock
and the full exercise of the Warrants, and, if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all the then outstanding Series B Preferred Stock and the full
exercise of the Warrants, the Company will take such corporate action as may, in
the opinion of its counsel, be necessary to increase its authorized but unissued
shares of Common Stock to such number of shares as shall be sufficient for such
purposes, including without limitation engaging in best efforts to obtain the
requisite shareholder approval. Without in any way limiting the foregoing, the
Company agrees to reserve and at all times keep available solely for purposes of
conversion of the Series B Preferred Stock and the exercise of the Warrants such
number of authorized but unissued shares of Common Stock that is at least equal
to 200% of the aggregate shares issuable upon conversion of the Series B
Preferred Stock and 150% of the aggregate shares issuable on exercise of the
Warrants, which numbers may be reduced by the number of Common Shares or
Warrant Shares actually delivered pursuant to conversion of the Series B
Preferred Stock or exercise of the Warrants and shall be appropriately adjusted
for any stock split, reverse split, stock dividend or reclassification of the
Common Stock. If the Company falls below the reserves specified in the
immediately preceding sentence and does not cure such non-compliance within 30
days of its start, then the Investors will be entitled to the discount
adjustments specified in Section 2(b)(i) of the Registration Rights Agreement.
If at any time the number of authorized but unissued shares of Common Stock is
not sufficient to effect the conversion of all the then outstanding shares of
Series B Preferred Stock or the full exercise of the Warrants, the Investors
shall be entitled to, INTER ALIA, the premium price redemption rights provided
in the Registration Rights Agreement.
Section 3.11 BEST EFFORTS. The parties shall use their best efforts to
satisfy timely each of the conditions described in Article IV of this Agreement.
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Section 3.12 FORM D; BLUE SKY LAWS. The Company agrees to file a Form D
with respect to the Series B Preferred Stock, Warrants, Common Shares and
Warrant Shares, as required under Regulation D, and to provide a copy thereof to
each Investor promptly after such filing. The Company shall, on or before each
Closing Date, take such action as the Company shall have reasonably determined
is necessary to qualify the Series B Preferred Stock, Warrants, Common Shares
and Warrant Shares for sale to the Investors at the applicable Closing pursuant
to this Agreement under applicable securities or "blue sky" laws of the states
of the United States (or to obtain an exemption from such qualification), and
shall provide evidence of any such action so taken to each Investor on or prior
to the Closing Date.
Section 3.13 NO SENIOR INDEBTEDNESS: LIMITATION ON ISSUANCE OF EQUITY.
(a) Until the Registration Statement (as defined in the
Registration Rights Agreement) has been declared effective by the SEC and the
Common Shares are subject to Effective Registration, neither the Company nor any
of its subsidiaries will issue any equity securities or instruments or rights
convertible into or exchangeable or exercisable for any equity securities except
pursuant to presently outstanding convertible securities and the Company's Stock
Option Plan, as amended, or other options to employees of the Company and its
subsidiaries.
(b) For a period of twelve (12) months following the Closing,
except as consented to in writing by the Investors, the Company shall not issue
or grant (i) any convertible securities the terms of which do not provide for a
fixed rate of conversion throughout the term of the security or (ii) any option,
warrant or other right to purchase securities of the Company whose exercise is
contingent upon, or whose price is determined with respect to, the market price
for the Common Stock; provided, however, that the twelve month period shall be
extended one day for each day that there is not Effective Registration.
Section 3.14 DELISTING; BEST EFFORTS. If a conversion of any shares of
Series B Preferred Stock in whole or in part for Common Shares by an Investor
could result in the Company being delisted from the Nasdaq NMS for issuing in
excess of 20% of its outstanding Common Stock to the Investors without the
approval of the Company's shareholders, then the Company, upon the Investor's
request, must redeem any and all Series B Preferred Stock covered by the
applicable Conversion Notice (as defined in the Articles of Amendment) and any
and all Series B Preferred Stock that would, if a Conversion Notice for all
shares of Series B Preferred Stock were then delivered, result in the Company
being subject to such delisting, at a price equal to 130% of the Liquidation
Value (as defined in the Articles of Amendment). If required, the Company will
use its best efforts to obtain promptly shareholder approval pursuant to NASD
Rule 4460(i) authorizing the issuance of all Common Shares and Warrant Shares
issuable upon the conversion of any shares of Series B Preferred Stock or the
exercise of any Warrants, including by calling a special meeting of such
shareholders within 45 days of the date of any such attempted conversion or, if
the Trading Price (as defined in the Articles of Amendment) decreased by more
than 20% over the preceding 30 days, then 45 days shall be increased to 60 days)
and having the Company's Board of Directors recommend such approval in a proxy
statement.
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Section 3.15 REGISTRATION RIGHTS. The Company shall file and use its
best efforts to cause to become effective, as promptly as possible, a
registration statement on Form S-3 under the Act (or in the event that the
Company becomes ineligible to use such form, such other form as the Company is
eligible to use under the Act) covering the resale of the Common Shares and the
Warrant Shares issuable upon the conversion of the shares of Series B Preferred
Stock and the exercise of the Warrants, respectively, and shall take all action
necessary to qualify the Common Shares and the Warrant Shares under all
applicable state securities laws, all in accordance with the Registration Rights
Agreement to be entered into by the Company and the Investors at the Closing.
Section 3.16 LEGENDS. Upon effectiveness of the Registration Statement
(as defined in the Registration Rights Agreement), the Common Shares and the
Warrant Shares and certificates evidencing the same shall at all times be free
of legends (except as otherwise provided herein or in the Articles of Amendment,
Warrants, Registration Rights Agreement), "stop transfers", "stock transfer
restrictions" or other restrictions.
Section 3.17 CORPORATE EXISTENCE. The Company will take all steps
necessary to preserve and continue the corporate existence and solvency of the
Company. So long as an Investor beneficially owns any Series B Preferred Stock,
the Company shall maintain its corporate existence and shall not sell all or
substantially all of the Company's assets, except in the event of a merger or
consolidation or sale of all or substantially all of the Company's assets, where
the surviving or successor entity in such transaction (i) assumes the Company's
obligations hereunder and under the agreements and instruments entered into in
connection herewith and (ii) is a publicly traded corporation whose Common Stock
is listed for trading on Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
ARTICLE IV
CONDITIONS TO CLOSINGS
Section 4.1 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE COMPANY TO
SELL THE SERIES B PREFERRED STOCK. The obligation hereunder of the Company to
issue and/or sell the Series B Preferred Stock to the Investors at the Closing
(unless otherwise specified) is subject to the satisfaction, at or before the
Closing, of each of the applicable conditions set forth below. These conditions
are for the Company's sole benefit and may be waived by the Company at any time
in its sole discretion.
(a) ACCURACY OF THE INVESTORS' REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each Investor will be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties as of an
earlier date, which will be true and correct in all material respects as of such
date).
(b) PERFORMANCE BY THE INVESTORS. Each and every Investor
shall have performed all agreements and covenants and satisfied all conditions
required to be performed or satisfied by it at or prior to the Closing
17
(c) NO INJUNCTION. No statute, rule, regulation, executive
order, decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of competent
jurisdiction which prohibits the consummation of any of the transactions
contemplated by this Agreement or the Registration Rights Agreement or the
Articles of Amendment or the Warrants.
Section 4.2 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE INVESTORS TO
PURCHASE THE SERIES B PREFERRED STOCK. The obligation hereunder of each Investor
to acquire and pay for the Series B Preferred Stock at the Closing (unless
otherwise specified) is subject to the satisfaction, at or before the Closing,
of each of the applicable conditions set forth below. These conditions are for
each Investor's benefit and may be waived by each Investor at any time in its
sole discretion.
(a) ACCURACY OF THE COMPANY'S REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company shall be true and correct in
all material respects as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties as of an
earlier date, which shall be true and correct in all material respects as of
such date).
(b) PERFORMANCE BY THE COMPANY. The Company shall have
performed all agreements and covenants and satisfied all conditions required to
be performed or satisfied by the Company at or prior to the Closing.
(c) NASDAQ NMS. From the date hereof to the Closing Date,
trading in the Company's Common Stock shall not have been suspended by the SEC,
the Nasdaq NMS (or other Approved Market) or the NASD, and trading in securities
generally as reported by the Nasdaq NMS (or other Approved Market) shall not
have been suspended or limited or minimum prices shall not have been established
on securities whose trades are reported by the Nasdaq NMS, and the Common Stock
shall not have been delisted from the Nasdaq NMS (or any other Approved Market
where they are currently listed).
(d) NO INJUNCTION. No statute, rule, regulation, executive,
judicial or administrative order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement or the Registration Rights Agreement
or the Articles of Amendment or the Warrants.
(e) OPINION OF COUNSEL. At the Closing, the Investors shall
have received an opinion of counsel to the Company in the form attached hereto
as EXHIBIT 4.2(E) and such other opinions, certificates and documents as the
Investors or their counsel shall reasonably require incident to the Closing.
(f) REGISTRATION RIGHTS AGREEMENT. The Company and the
Investors shall have executed and delivered the Registration Rights Agreement in
the form and substance of EXHIBIT 4.2(F) attached hereto.
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(g) ADVERSE CHANGES. Since April 30, 1998, no event shall have
occurred which had or is likely to have, in the reasonable judgment of the
Investors, a Material Adverse Effect on the Company or any of its direct or
indirect subsidiaries.
(h) OFFICER'S CERTIFICATE. The Company shall have delivered to
the Investors a certificate in form and substance satisfactory to the Investors
and the Investors' Counsel, executed by an officer of the Company, certifying as
to satisfaction of closing conditions, incumbency of signing officers, and the
true, correct and complete nature of the Charter, By-Laws, good standing of and
authorizing resolutions of the Company.
(i) SERIES B PREFERRED STOCK AND WARRANTS. The Investors shall
have received certificates representing the shares of Series B Preferred Stock
and the Warrants in the form and substance of EXHIBIT 1.1B hereto.
(j) DUE DILIGENCE. Each Investor shall have completed its
financial, accounting, operational and legal due diligence in a manner
satisfactory to such Investor in its sole discretion.
(k) CONSENTS. The Company shall have received and delivered to
the Investors (i) the consent of all applicable lenders, to the extent required,
to the issuance of the Series B Preferred Stock and (ii) the waiver of any and
all pending events of default (or pending events which with the lapse of time or
notice or both would constitute an event of default) thereunder.
ARTICLE V
LEGEND AND STOCK
Section 5.1. The Company will issue one or more certificates
representing the shares of Series B Preferred Stock and the Warrants in the name
of the applicable Investor and in such denominations to be specified by such
Investor prior to (or from time to time subsequent to) Closing. Each certificate
representing the Series B Preferred Stock and the Warrants initially shall be
stamped or otherwise imprinted with a legend substantially in the following
form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
SOLD, OFFERED FOR SALE, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
The Company agrees to reissue the shares of Series B Preferred Stock
and the Warrants without the legend set forth above at such time as (i) the
holder thereof is permitted to dispose of such Series B Preferred Stock and/or
Warrants and Common Stock issuable upon conversion or exercise thereof pursuant
to Rule 144(k) under the Act, or
19
(ii) such shares of Series B Preferred Stock and/or Warrants are sold to a
purchaser or purchasers who (in the opinion of counsel to the seller or such
purchaser(s), in form and substance customary for opinions of counsel in similar
transactions) are able to dispose of such shares publicly without registration
under the Act.
Prior to the Registration Statement (as defined in the Registration
Rights Agreement) being declared effective, any Common Shares issued pursuant to
conversion of the Series B Preferred Stock or Warrant Shares issued upon
exercise of the Warrants shall bear a legend in the same form as the legend
indicated above. Upon such Registration Statement becoming effective, the
Company agrees to promptly, but no later than three (3) business days
thereafter, issue new certificates representing such Common Shares and Warrant
Shares without such legend. Any Common Shares issued pursuant to conversion of
the Series B Preferred Stock and any Warrant Shares issued upon exercise of the
Warrants after the Registration Statement has become effective shall be free and
clear of any legends, transfer restrictions and stop orders. Notwithstanding the
removal of such legend, each Investor agrees to sell the Common Shares and
Warrant Shares represented by the new certificates in accordance with the
applicable prospectus delivery requirements (if copies of a current prospectus
are provided to such Investor by the Company), if any, or in accordance with an
exception from the registration requirements of the Act.
Nothing herein shall limit the right of any holder to pledge these
securities pursuant to a bona fide margin account or lending arrangement.
ARTICLE VI
TERMINATION
Section 6.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be
terminated at any time prior to the Closing by the unanimous written consent of
the Company and each of the Investors.
Section 6.2 OTHER TERMINATION. This Agreement may be terminated by
action of the Board of Directors of the Company or by any of the Investors at
any time if the Closing shall not have been consummated by the fifth business
day following the date of this Agreement; provided, however, that the party (or
parties) prepared to close shall retain its (or their) right to xxx for any
breach by the other party (or parties).
ARTICLE VII
MISCELLANEOUS
Section 7.1 STAMP TAXES. The Company shall pay all stamp and other
taxes and duties levied in connection with the issuance of the Series B
Preferred Stock and the Warrants pursuant hereto, the Common Shares issued upon
conversion of the Series B Preferred Stock and the Warrant Shares issued upon
exercise of the Warrants.
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Section 7.2 SPECIFIC PERFORMANCE; CONSENT TO JURISDICTION; JURY TRIAL.
(a) The Company and the investors acknowledge and agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent or cure breaches of the provisions of
this Agreement and to enforce specifically the terms and provisions hereof,
this being in addition to any other remedy to which any of them may be entitled
by law or equity.
(b) THE COMPANY AND EACH OF THE INVESTORS (I) HEREBY
IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT, THE NEW YORK STATE COURTS AND OTHER COURTS OF THE UNITED STATES SITTING
IN NEW YORK COUNTY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT AND (IT) HEREBY WAIVES, AND AGREES
NOT TO ASSERT IN ANY SUCH SUIT ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT
PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT, ACTION OR
PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF THE SUIT,
ACTION OR PROCEEDING IS IMPROPER. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
COMPANY AND EACH OF THE INVESTORS CONSENTS TO PROCESS BEING SERVED IN ANY SUCH
SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF TO SUCH PARTY AT THE
ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW.
(c) THE COMPANY AND EACH OF THE INVESTORS HEREBY WAIVE ALL
RIGHTS TO A TRIAL BY JURY.
Section 7.3 ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with
the Registration Rights Agreement, the Warrants, the Articles of Amendment and
the agreements and documents executed in connection herewith and therewith,
contains the entire understanding of the parties with respect to the matters
covered hereby and thereby and, except as specifically set forth herein or
therein, neither the Company nor any Investor makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be waived or amended other than by a written instrument
signed by the party against whom enforcement of any such amendment or waiver is
sought.
Section 7.4 NOTICES. Any notice or other communication required or
permitted to be given hereunder shall be in writing by mail, facsimile or
personal delivery and shall be effective upon actual receipt of such notice. The
addresses for such communications shall be:
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to the Company:
Able Telcom Holding Corp.
0000 Xxxxx Xxxxx, Xxxxx 0000,
Xxxx Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, President
Facsimile: (000) 000-0000
with copies to:
Gunster, Yoakley, Xxxxxx-Xxxxx & Xxxxxxx
Xxxxxxxx Point, Suite 500 East
000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
to the Investors:
For Palladin Partners I, L.P., Halifax Fund
L.P., The Gleneagles Fund, Palladin Overseas
Fund Limited, Colonial Penn Life Insurance
Company and Palladin Securities, L.L.C.
c/o The Palladin Group, as Attorney-in-Fact
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
For RCG International Investors, LDC
c/o Xxxx Xxxx Capital Management, L.P.
0 Xxxx Xxxxx Xxxx, Xxxxx 000
000 Xx. Xxxxxx Xxxx
Xxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx
with copies to:
Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attention: X. Xxxxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Any party hereto may from time to time change its address for notices by giving
at least 10 days' written notice of such changed address to the other parties
hereto.
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Section 7.5 INDEMNITY. Each party shall indemnify each other party
against any loss, cost or damages (including reasonable attorney's fees but
excluding consequential damages) incurred as a result of such parties' breach of
any representation, warranty, covenant or agreement in this Agreement.
Section 7.6 WAIVERS. No waiver by any party of any default with respect
to any provision, condition or requirement of this Agreement shall be deemed to
be a continuing waiver in the future or a waiver of any other provision,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.
Section 7.7 HEADINGS. The headings herein are for convenience only, do
not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.
Section 7.8 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and permitted assigns. The parties hereto may amend
this Agreement without notice to or the consent of any third party. The Company
may not assign this Agreement or any rights or obligations hereunder without the
prior written consent of all Investors (which consent may be withheld for any
reason in their sole discretion), except that the Company may assign this
Agreement in connection with the sale of all or substantially all of its assets
provided that the Company is not released from any of its obligations hereunder,
such assignee assumes all obligations of the Company hereunder, and appropriate
adjustment of the provisions contained in this Agreement, the Registration
Rights Agreement, the Articles of Amendment and the Warrants is made, in form
and substance satisfactory to the Investors, to place the Investors in the same
position as they would have been but for such assignment, in accordance with the
terms of the Articles of Amendment and the Warrants. Any Investor may assign
this Agreement (in whole or in part) or any rights or obligations hereunder
without the consent of the Company in connection with any sale or transfer of
shares of the Series B Preferred Stock or Warrants held by such Investor,
provided that such Investor may not assign this Agreement prior to the Closing
Date without the Company's prior written consent except to an affiliate or
affiliates of such Investor.
Section 7.9 NO THIRD PARTY BENEFICIARIES. This Agreement is intended
for the benefit of the parties hereto and their respective permitted successors
and assigns and is not for the benefit of, nor may any provision hereof be
enforced by, any other person.
Section 7.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS EXECUTED AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE
AND, WHERE APPLICABLE, FEDERAL LAW.
Section 7.11 SURVIVAL. The representations and warranties and the
agreements and covenants of the Company and each Investor contained herein shall
survive the Closing. If any provision of this Agreement becomes or is declared
by a court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force
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and effect without said provision, provided that no such severability shall be
effective if it were to materially change the economic benefit of this Agreement
to any party.
Section 7.12 EXECUTION. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, it
being understood that all parties need not sign the same counterpart.
Section 7.13 PUBLICITY. The Company agrees that it will not disclose,
and will not include in any public announcement, the name of any Investor
without such Investor's consent, unless and until such disclosure is required by
law or applicable regulation, and then only to the extent of such requirement.
The Company agrees that it will deliver a copy of any public announcement
regarding the matters covered by this Agreement, the Registration Rights
Agreement, the Articles of Amendment or the Warrants or any agreement and
document executed herewith and therewith to each Investor and any public
announcement including the name of an Investor to such Investor, reasonably in
advance of the release of such announcements. The Company will provide the
Investor the opportunity to review and comment on any press release announcing
consummation of the Closing or any other press release describing or referring
to the transactions contemplated hereby.
Section 7.14 SEVERABILITY. The parties acknowledge and agree that the
Investors are not agents, affiliates or partners of each other, that all
representations, warranties, covenants and agreements of the Investors hereunder
are several and not joint, that no Investor shall have any responsibility or
liability for the representations, warranties, agreements, acts or omissions of
any other Investor, and that any rights granted to "Investors" hereunder shall
be enforceable by each Investor hereunder.
Section 7.15 LIKE TREATMENT OF HOLDERS; REDEMPTION. Neither the Company
nor any of its affiliates shall, directly or indirectly, pay or cause to be paid
any consideration (immediate or contingent), whether by way of interest, fee,
payment for the redemption or conversion of the shares of Series B Preferred
Stock or exercise of the Warrants, or otherwise, to any holder of Series B
Preferred Stock or the Warrants, for or as an inducement to, or in connection
with the solicitation of, any consent, waiver or amendment of any terms or
provisions of the Articles of Amendment or this Agreement or the Registration
Rights Agreement or the Warrants, unless such consideration is required to be
paid to all holders of Series B Preferred Stock and Warrants bound by such
consent, waiver or amendment whether or not such holders so consent, waive or
agree to amend and whether or not such holders tender their shares of Series B
Preferred Stock or Warrants for redemption, conversion or exercise. The Company
shall not, directly or indirectly, redeem any shares of the Series B Preferred
Stock unless such offer of redemption is made pro rata to all holders of Series
B Preferred Stock on identical terms.
Section 7.16 NO STRICT CONSTRUCTION. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
ABLE TELCOM HOLDING CORP.
By: /s/ XXXX X. XXXXX
----------------------------------
Name: XXXX X. XXXXX
Title: CHIEF FINANCIAL OFFICER
INVESTORS:
--------------------------------------
RGC INTERNATIONAL INVESTORS,
LDC
By: Xxxx Xxxx Capital Management,
L.P. Investment Manager
By: RGC General Partner Corp, as
General Partner
By: /s/ XXXXX BLOCK
---------------------------
Xxxxx Block
Managing Director
By:
/s/ XXXXXX X. XXXXXXX
---------------------------------------
PALLADIN SECURITIES L.L.C.
By:
/s/ XXXXXX X. XXXXXXX
---------------------------------------
HALIFAX FUND, L.P.
By: The Palladin Group, as Attorney-
in-Fact and Investment Advisor
By:
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/s/ XXXXXX X. XXXXXXX
---------------------------------------
PALLADIN PARTNERS I, L.P.
By: Palladin Asset Management LLC
as Attorney-in-Fact
By:
/s/ XXXXXX X. XXXXXXX
---------------------------------------
THE GLENEAGLES FUND COMPANY
By: The Palladin Group, as Attorney-
in-Fact and Investment Advisor
By:
/s/ XXXXXX X. XXXXXXX
---------------------------------------
PALLADIN OVERSEAS FUND
LIMITED
By: The Palladin Group, as Attorney-
in-Fact and Investment Advisor
By:
/s/ XXXXXX X. XXXXXXX
---------------------------------------
COLONIAL PENN LIFE INSURANCE
COMPANY
By: The Palladin Group, as Attorney-
in-Fact and Investment Advisor
By:
[Signature page to Able Telcom Holding Corp. Convertible Preferred Stock
Purchase Agreement]
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EXHIBITS AND SCHEDULES
Schedule I List of Investors
Exhibit l.1A Form of Articles of Amendment
Exhibit 1.1B Form of Warrant
Exhibit 2.1(a) List of Subsidiaries
Exhibit 2.1(c)(i) Certificate of Incorporation of the Company
Exhibit 2.1(c)(ii) By-Laws of the Company
Exhibit 2.1(r) Outstanding Securities Subject to Registration Rights, etc.
Exhibit 4.2(e) Opinion of Company Counsel
Exhibit 4.2(f) Registration Rights Agreement
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